Export Import Bank exemplifies Washington's spending problem

A trend has taken shape in Washington, and it has put our country on a devastating path towards potential fiscal ruin. The trend is characterized by an unsustainable penchant for spending money we don't have.

It became crystal clear in last year's debt ceiling negotiations and was further highlighted by the recent debate surrounding the fiscal cliff; our country is broke, yet our government continues to spend more, risk more and accumulate more debt. Entitlements are often blamed for the vast majority of our spending issues, but our tendency to overspend is not restricted to just these.

Parallels exist across the spectrum of government agencies - each case portraying the same doomed philosophy that threatens the solvency of our entire economy. A telling example is the Export Import Bank (Ex-Im): an anti-free-market institution that consistently risks billions of public dollars for the sake of corporate welfare.

The Ex-Im Bank is a taxpayer-backed federal agency charged with financing U.S. exports to countries around the world. Through the use of direct loans and loan guarantees, the Ex-Im Bank facilitates the sale of U.S. made products to entities and nations that would otherwise be unable to obtain them. With a massive budget backed by the goodwill of the American taxpayers, one would hope the Ex-Im Bank is both transparent and generally risk-averse in its practice. It turns out, it is not.

Directed by politically-driven backroom deals, the Ex-Im Bank's portfolio of investments is a hodgepodge of hits and misses. Consider the following: Solyndra, prior to its bankruptcy, received a $10.3 million from the Ex-Im Bank. Las Vegas solar plant Amonix, prior to its bankruptcy, received a nine million loan guarantee from the Ex-Im Bank. Abound Solar, prior to its bankruptcy, took in $9.2 million from the Ex-Im Bank.

Notice a pattern? For a government organization who financial agreements are backed by U.S. taxpayers, the Ex-Im Bank seems to ignore common sense investing principles, choosing instead to make a remarkable number of risky bets. Where the Ex-Im Bank is successful with its investments, it is detrimental to free-market competition.

During the fiscal year 2012, the Ex-Im Bank authorized $14.7 billion in loan guarantees and direct financial aid. Of that $14.7 billion, 82.7 percent, or $12.2 billion, went directly toward financing the purchase of Boeing products (read airplanes). But why would a company like Boeing, which enjoyed nearly $70 billion in revenue in 2011, warrant additional support from U.S. taxpayers?

The answer of course, is politics. Thanks to a cadre of lobbyists and an extensive network of Boeing supporters within the U.S. government, the company consistently receives billions of dollars from the Ex-Im Bank each year. As is often the case with politically driven investments, however, there is still risk involved.

Last year, the Ex-Im Bank financed the purchase of over three billion worth of Boeing 777's to Air India - a company that has accumulated so much debt that it is now re-selling the same planes that the Ex-Im Bank helped finance. And if that isn't bad enough, inside deals like this one have granted foreign airlines a competitive advantage in the international market; penalizing U.S. carriers who try to play by the rules. It has been estimated that the Ex-Im Bank costs the U.S. airline industry up to 7,500 jobs and $684 million per year - an amount that is transferred to consumers in the form of higher ticket prices and fewer flight options.

The recent debate over the fiscal cliff brought to light, yet again, the unsustainable spending policies of the U.S. government. With over $16 trillion worth of public debt amassed, the U.S. is already feeling the pressure of its mounting liabilities. But certain institutions don't seem to have seen or read the memo. The Ex-Im Bank continues to spend money recklessly and without consideration of its effect on the free market.

Congress has done its part, passing legislation that directs the secretary of the Treasury to begin winding down Ex-Im's corporate subsidies. Unfortunately, Timothy Geithner has failed to take any action. Geinther will soon be departing and we can only hope that the incoming secretary of Treasury abides by the law and finally puts an end to this crony capitalism.

Ken Blackwell is a former secretary of state of Ohio. He was also the U.S. ambassador to United Nations Human Rights Council from 1991-93.

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Do you agree?

yes - there is a major spending problem, and it is due to both sides of the aisle. common sense would be to cut spending, as most families have to do when trying to budget for a home, vehicle, or school. i love hearing the political hypocrites babble about how much in loans a student will incur, yet never speaking about how much more in taxes that student will be paying due to irresponsible spending now.

If the family next door to you spends itself into financial ruin, is it YOUR responsibility to pay off their debts? Should YOUR children have to do with less because you now have to pay for your neighbor's poor judgment?

That's how I feel. I did not tell Washington to spend, spend, spend until there is nothing left. They've been spending like crazy for over a decade and now that they have no more to spend they want to dump mess in the laps of the American people and make THEM pick up the tab.

Whenever anyone speaks of cutting "spending" they are often referring to Social Security and Medicare, something that hundreds of millions of Americans have dutifully and forcefully had to pay into all their working lives. It's not my fault Washington has mismanaged THAT, as well, but don't deny me what is rightfully mine.

Congress is determined to screw each and every one of us out of something. More and more is being taken away from the taxpayer because there are idiots in Washington who have taken and spent every last nickel they could beg, borrow or steal. That's not YOUR fault or mine and I'm outraged that we're being manipulated into having to cover the mismanagement of these idiots.

Maybe The Fed Has some anwsers,maybe they are the problem.. “Paper money has had the effect in your state that it will ever have, to ruin commerce, oppress the honest, and open the door to every species of fraud and injustice.” George Washington

That quote was from a 1786 letter that Washington sent to Thomas Jefferson. "Paper is poverty," Jefferson, in turn, observed in 1788. "It is only the ghost of money, and not money itself." In 1817, he also said that paper money "abuses also are inevitable and, by breaking up the measure of value, make a lottery of all private property."

Yes, totally, Gore is a great example of men saying what is right for others but grabbing all the cash he can for himself, our congress and president know we need to stop spending but not until they get what they want, parents ruining their children's credit to live high on the hog without thought for the suffering and sacrifices their children will face later on because of their greed is being played out in Washington right now , sadly, 51% percent of voters want their hand in the pot too!!

As much it tugs at our heart strings, using deficit financing to provide our government's numerous programs is dangerous to our future generation's health. Future generations will have to shoulder the bill. That's the pain we don't feel or hear about; the pain that doesn't make its way into news stories, at least not in human terms; the pain that's no less real, just less pressing. Things may be a bit rough for us right now, but many Americans do not realize the burden we're putting on our children to ease the pain for ourselves? Wouldn't a loving parent suffer the pain right now so that their children might have a better life? Financing almost half of our federal governments costs unto our kids is immoral. Where would our generation be today had previous generations felt that was acceptable? Our federal deficit is the greatest threat to our future.

Anyone with a modicum of intelligence can see the direction this country is going under this (mis-)administration. It may come as a surprise to 'low information' voters and young skulls full of mush -- but the following film will give you a glimpse into reality.....

Oh hell, Blackwell, just get the Right Reverends Russell Johnson and Rod Parsley on the phone and have a tax-exempt prayer-a-thon to solve debt. If every working "christian" worldwide would put a single year's wages into the collection plate (as per Luke 6:30), this country's debt would be gone instantly.

Good question. After reading a little about it, IMO the Ex-Im Bank was a good idea at the outset, but like all good government ideas it has been perverted by corporate America into yet another vehicle for getting their hands on "free" taxpayer money.

We don't have a spending problem, we have a problem of illusion. We live under false pretenses, in a huge bubble of inflated value based on nothing. What we consider economic growth is nothing but a further inflation of the bubble. The bottom line is that any system dependent of never ending growth is doomed to failure. The economy can be no exception to this rule of nature.

As evidenced time and time again, America has a spending problem. Worth noting that the big wrangling over the 'fiscal cliff' resulted in a net increase to the treasury of about $80 billion per year (assuming a lot of positives happen). Meanwhile, the deficit for THIS year is over $1000 billion.

You cannot tax away a deficit of this magnitude. Spending cuts...drastic ones...are needed, but we know it's not likely to happen.

Ex-Im just needs to be shut down. In fact, the IMF and World Bank can get shut down as well. All three are nothing more than money drainers with politicians at the helm instead of real financial experts.